Deutsche Bank hurt by equity de­riv­a­tives

The Pak Banker - - FRONT PAGE -

Weaker- t han- ex­pected fourth-quar­ter re­sults in Deutsche Bank AG 's equity de­riv­a­tives and struc­tured­fi­nance busi­nesses weighed on per­for­mance at its in­vest­ment bank, re­flect­ing the chal­lenges the len­der faces to gen­er­ate prof­its in core units while slash­ing costs, ac­cord­ing to peo­ple fa­mil­iar with the mat­ter.

Ger­many's largest bank hasn't dis­closed re­sults of those two se­cu­ri­ties busi­nesses ahead of its earn­ings re­port sched­uled Thurs­day. But it warned last week of a year-on-year de­cline in fourth-quar­ter rev­enue in its in­vest­ment bank, cit­ing "chal­leng­ing mar­ket con­di­tions."

The dis­clo­sure jarred in­vestors, help­ing send the bank's shares to their low­est level since 2009. The shares are down 25% this year, com­pared with around 15% for the Stoxx Europe 600 in­dex of banks.

Deutsche Bank, which is shrink­ing as part of a com­pa­ny­wide over­haul un­der new coChief Ex­ec­u­tive Of­fi­cer John Cryan, warned last week that it would post a €2.1b fourth-quar­ter loss and its first full-year loss since 2008. Lit­i­ga­tion and re­struc­tur­ing charges con­tin­ued to add to the len­der's woes. Trad­ing and lend­ing head­winds in some ar­eas of global credit mar­kets and stock-mar­ket volatil­ity have cre­ated chal­lenges for many in­vest­ment banks.

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